Wisconsin Latest State to Probe Oil Prices

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Wisconsin Latest State to Probe Oil Prices

10/14/2005

MADISON, Wis. -- The state Department of Justice issued civil investigative demands Monday to 13 oil companies for information on the availability and sale of fuel in the weeks immediately before and after Hurricane Katrina struck, reported The Capital Times .

The demands -- similar to subpoenas -- seek information as to whether or not fuel shortages actually occurred and whether increased prices at retail stations in Wisconsin were justified, according to the report.

Attorney General Peg Lautenschlager, who heads the Justice Department, announced last month that she would investigate whether market manipulation occurred.

Erin Roth, executive director of the Wisconsin Petroleum Council, told The Capital Times that only seven of the companies listed by the Justice Department were major oil companies. "Six are just traders and terminals," he said. "Flynt Hills Resources of Wichita, Kansas, which provides most fuel to Wisconsin from its refinery in Rosemount, Minn., is not on the list."

However, he said in the The Capital Times that the industry would "cooperate to the fullest."

As for market manipulation allegations, Roth told The Capital Times , "We've been investigated 40 times over 10 years, including by Wisconsin and the federal government, and not one time has market manipulation been found. We will be exonerated this time."

The marketplace, which depends on supply and demand, was the reason for the price rise, he said in the report.

The hurricane that struck Louisiana, Mississippi and Alabama affected some oil rigs and refineries in the Gulf of Mexico region.

The Justice Department wants the companies to produce all documentation by Nov. 10 relating to the purchase of fuel from suppliers, the distribution and delivery of fuel to retail stores, and the retail purchase of fuel as it relates to consumers in Wisconsin, The Capital Times reported .

If the companies do not comply, the matter would be taken to court, Lautenschlager said in an interview with The Capital Times .

"It is an obligation under Wisconsin law for them to produce the information. We are serving the papers on representatives of the companies in Wisconsin," she said. "We don't have a price-gouging statute in Wisconsin, though I am trying to get one enacted, but we can do something with deceptive practices. They have said that because of a shortage, prices rose. We are trying to make that determination."

She added that her office is working closely with officials from Illinois, Minnesota and Iowa to investigate possible violations.

"Wisconsin consumers weren't the only ones getting burned at the pump," she said in the report.

The state Justice Department also is anticipating referrals from the state Department of Agriculture, Trade and Consumer Protection regarding violations of Wisconsin's consumer protection laws, which prohibit increasing the price of retail gasoline more than once in a 24-hour period.

But Lautenschlager noted that initial evidence shows that most gas stations also saw their wholesale prices rise sharply.

"It appears that most of the retail stations were simply passing on their increased costs," she said in a written statement, according to The Capital Times .

That assessment was based on discussions with gasoline retailers and some oil company officials, Kelly Kennedy, a spokesman for Lautenschlager, told The Capital Times .